Which professions are exempt from Income tax ?

The Income-tax Act 1961, provides certain income sources to be partially or fully exempted from Income tax. Below we have summarised all listed professions exempted from Income tax:

Section 10 Exemptions

– any agriculture income(including rent or revenue received from agriculture purposes, sales of agriculture produce etc.)

– any income from the farmhouse with the subject to provisions of Section 2(1a)

– any amount received by any member of HUF (Hindu undivided family) from HUF would be exempted in hands of member Section 10(2).

-any share of profit received from any firm including LLP, not applicable to rent or remuneration received from the firm Section 10(2a).

– any interest income as received on notified securities, bonds etc. in hands of individual taxpayer Section 10(4).

-any interest income received or bank holdings on account of NRE- Non-Resident (External). Section 10(4)(ii).

– any leave travel concession as received by an employee for himself or for his family from the employer Section 10(5).

– any remuneration received by individual working in Indian institutions like embassy, legation etc not being an Indian citizen (not staying above 90 days), provided that such an institution is not engaged in any trading or business in India and such income shall not be deductible from the income of the employer chargeable under this act Section 10(6).

– any prerequisite or allowance permitted by the government to its employees working outside the country Section 10(7).

– any perquisites including gratuity amount specified and other benefits provided by the employer to the employee are exempted in hands of employee Section 10(10) to Section 10 (10CC).

– any sum received under an LIC- Life insurance policy provided that:

>If received by individual on insurance of a dependent handicapped person. Section 80DD(3)

>if received by individual on insurance of dependent family member suffering from a disease. Section 80DDA(3)

>if received under a key man insurance policy.

>if received on death or demise of a dependent person.

– any payment received on account of the statutory provident fund including interest, the contribution of employer etc. will be exempt from tax Section 10(11).

– an amount received as provident fund contribution from the employer by the employee as specified under Section 10(12)

-any income in form of allowances received up to a certain specified limit under Section10(13) as:

>House rent allowance Section 10(13a)

>Entertainment allowances

– any allowances or perquisites allowed to High court judges, UNO employees and government employees working abroad, also including other employee benefits allowed as:

> Children Education allowance up to 1200 per year for 2 children

> Children hostel allowances up to 3600 per year for 2 children

>Transport allowances from employer up to Rs 1600 per month and 3200 p.m. for handicapped

> Allowances given for incurring expense during transport up to Rs 10000/- p.m. or 70% of allowance whichever is lower.

>Allowances for a tribal area up to Rs 200 p.m.

> other employer benefits received under Section 10(14).

– any income received on account of interest, a premium on redemption on notified securities, capital investment bonds, relief bonds, and other related incomes has been exempted from tax Section 10(15).

– any scholarship amount received by any student from the government or from any university or institution including the tuition fees and other expenses has been exempted to the fullest. Section 10(16).

– any pension amount as received by government servants on account of gallantry awards and honors received from government Section 10(18).

– any pension amount as received by any family member of armed forces including paramilitary forces Section 10(19).

– any income from annual value of any place of the former ruler or a portion of the place in occupation shall be exempted (except if the place is let out to someone else) Section 10(19a).

– any income of a local authority received in cases where income is chargeable under the heads ‘Income from other sources’, ‘Capital gains’, ‘Income from other sources’, Income from any trade or business, Income from business of supply of water or electricity within or outside its own jurisdictional area Section 10(20).

– any income on account of Section 10(23) from

> khadi and village boards Section 10(23BB)

> European economic community received on investment, dividend income, capital gains etc. on notified securities Section 10(23BBB).

> SAARC fund Section 10(23BBC)

> Secretariat of Asian Organisation of Supreme Audit Institutions Section 23(BBD)

> Insurance Regulatory and Development Authority Section 10(23BBE)

>Central Electricity Regulatory Commission Section 10(23BBG)

>Prasar Bharati  Section 10(23BBH)

>Prime minister relief fund or Prime minister aid Section 10(23C)(iiia).

> Swach Bharat Kosh Section 10 (23C)( iiiaa)

>Clear Ganga Fund Section 10(23C)(iiiaaa)

>Chief minister relief fund or Lieutenant Governor’s relief fund Section 10(23C)(iiiaaaa).

>any education institute working solely for educational purpose and not for profit wholly or substantially financed by government Section 10(23)(iiiab)

>any education institute not for profit and solely for education purpose having turnover below 1 crore Section 10 (23C)(iiiad)

> tax-free mutual funds registered under SEBI guidelines and registered under specified authorities Section 10 (23D)

securitization trust Section 10 (23DA)

– any income received by a shareholder on buyback of shares of an unlisted company. Section 10 (34A)

– any income on account of holding UTI and other mutual funds Section 10 (35)

-any income arising when a company purchases any eligible equity or transfer of a long term capital asset held for a period of 12 months or more Section 10 (36).

– any capital gain income on the transfer of agriculture land Section 10(37).

– any income with respect to securities covered under Security transaction act (STT) Section 10(38).

– any income arising with respect to national or international sporting events Section for specified person Section 10(39).

– any income received by a subsidiary company as a grant or otherwise from its Indian holding company engaged in the business of transmission, generation and distribution of power with subject to provisions of Section 10 (40).

– any income from transfer of any capital asset of business engaged in the transmission, generation of power with subject to provisions of Sections 10(41).

– any amount received as a loan, either in installments or in a lump sum in a transaction of the reverse mortgage will be exempted in hands of individual Section 10(43).

-any amount received under new pension scheme trust Section 10(44).

-any allowance or perquisites received by Members or Chairman of UPSC Section 10(45).

– any income arising on account of infrastructure debt fund rules Section 10(47).

-any income on account of the National financial holding company as framed up government Section 10(49).

Section 56 Exemptions:

– any income on account of the amount received as a gift up to a specified limit by an individual or HUF under Section 56(ii) including

> gifts received from relatives

> gifts received on account of marriage

> property received as a gift (either from inherited state or from the person other than a relative)

Section 80 Exemptions:

– any income on account of investments and expenditure made as specified under Section 80C to 80U for HUFs and individuals, also including income from:

>investments made in pension funds (Section 80CCC)

>investment made in pension plans of government (Section 80CCD)

>investment made in long term infrastructure bonds (Section 80CCF)

>investments made in equity saving schemes issued by the government (Section 80CCG)

There is a good way you can manipulate your taxes with the above exemptions.

If you still find applicability of these exempted incomes in your tax return confusing, you can reach out to our tax expert here.